Key Differences: Term loans, cash credit, and overdrafts are all financing options available to businesses, each with distinct characteristics.

Purpose: Term loans are intended for long-term capital investments, whereas cash credit and overdrafts are designed to cover short-term operational expenses.

Repayment: Term loans are paid back over a predetermined period, while cash credit and overdrafts are repaid as the borrower uses the funds.

Interest Rates: Term loans typically have a fixed interest rate, while cash credit and overdrafts usually come with variable interest rates.

Credit Limit: A term loan offers a lump sum amount, whereas cash credit and overdrafts provide a revolving line of credit that the borrower can access as needed.

Collateral: Both term loans and cash credit often require collateral, whereas overdrafts might or might not require collateral, depending on the borrower’s creditworthiness.

In conclusion, these financing options cater to different business needs. Term loans are best for long-term investments, while cash credit and overdrafts are ideal for managing short-term cash flow. It’s crucial for businesses to assess their financial needs, compare interest rates, repayment conditions, and other features of these options before making a decision.